Ways to Help Deal with Market Losses

It’s been a year of unconventional politics, yet the investment markets have held strong. Despite the occasional blip in reaction to a political event, investors who have stayed the course have, for the most part, recovered.1 However, the markets have experienced an unusually long bull run, leading some analysts to consider a correction — a 10 percent drop from recent highs — on the horizon.2 Retirees and those on the cusp of retirement should consider their current investment risk and have a potential fallback plan in the event that market losses impact their retirement income.

  • One common bit of advice is to make sure your basic living expenses are covered. This means ensuring you have enough Social Security and pension income to cover housing, food and other essential expenses. If you do not, you may want to consider using a portion of your retirement assets to purchase an annuity that guarantees* a minimum level of income to help cover the balance. Expenses such as entertainment, travel and gifts can always be scaled back after a market decline to adjust for any loss of discretionary income.
  • Another strategy is to keep a store of cash, not just for emergencies but also to help cover income losses due to a market correction. In this scenario, an individual can use his cash to cover living expenses to give his portfolio time to recover, rather than selling securities for a loss just to make ends meet.
  • For individuals using their investments to generate income to help fund retirement, it’s important to stay on top of your allocation mix and consider making adjustments as needed due to market conditions.3
  • Finally, if a retiree’s portfolio takes a market hit, he or she may consider looking for other temporary sources of income rather than cashing out investments. Options may include taking a part-time job, renting out a vacation home or selling a spare car or other high-ticket item.

*Guarantees and protections provided by insurance products including annuities are backed by the financial strength and claims-paying ability of the issuing insurance carrier. Annuities are insurance products that may be subject to fees, surrender charges and holding periods which vary by company.


1 Paul R. La Monica. CNN. June 20, 2017. “The bull is back! Market near highs despite risks.” http://money.cnn.com/2017/06/20/investing/stocks-markets-rally/index.html. Accessed June 21, 2017.

2 Ibid.

3 Fidelity. Nov. 8, 2016. “Retirees: Six tips for volatile markets.” https://www.fidelity.com/viewpoints/retirement/coping-with-stock-volatility. Accessed June 21, 2017.